Banking shares slump on Dubai worries

Leading shares across Europe are sinking fast on worries about fallout from the financial problems in Dubai, with the FTSE 100 down around 100 points.

The leading UK index is down 98.12 at 5266.69, while Germany's DAX is off nearly 2% at 5689.51 and France's CAC has fallen 1.95% to 3728.35. There will be no guidance from Wall Street, since the US market is closed for the Thanksgiving holiday.

Banks are bearing the brunt of the declines, as investors fret about their exposure to Dubai. Yesterday the country called for a debt standstill on billions of dollars worth of debt at its Dubai World conglomerate and Nakheel property business. This prompted fears about the overall financial health of the kingdom.

In the UK Standard Chartered fell 72p to £15.35 and HSBC has lost 30.8p to 710.4p. The two banks are heavily exposed to the region. Meanwhile Barclays is down 11.8p at 304.5p and Royal Bank of Scotland has fallen 1.365p to 34.4p. Lloyds Banking Group - where investors are due to approve its £13.5bn cash call - has lost 3.28p to 90.97p. Deutsche Bank has also fallen around 4%.

Sterling has also dropped more than 1% against the dollar, while the euro hit a one month high against the pound, again on fears of UK banks' exposure to Dubai.

The Dubai debt debacle and the uncertainty that it has created as a results of the kingdom's forthcoming holiday has had a severe knock on effect on European equity markets, as well as throwing the bond market in to turmoil.